As the Chinese government offers subsidies to manufacturers in order to sell the panels for less than cost, cheap solar panels flood the global market making it more difficult for others to compete. As everyone is scurrying to provide more efficient means for delivering solar power, these manufacturers are able to dominate the global market. This, in turn, has caused a great deal of turmoil for other manufacturers in various countries.
In order to create a more balanced market, the United States has imposed 30 to 35-percent tariffs against importing Chinese manufactured solar panels. Initially, these tariffs were designed to help create a more versatile market by making the cost of panels comparative against other manufacturers – creating job security. Unfortunately, China has implemented its own tariffs against US suppliers of polysilicon – the component needed for solar cells. For some organizations, this tariff has reached as high a 53-percent reducing the income these business collect from Chinese panel manufacturers.
Elimination of Competition
The subsidies provided from the Chinese government to manufacturers have assisted in eliminating competition for various plants around the globe. For example: In June of 2013, German-based Conergy AG had to file for insolvency due to a lack of funding. A government report on solar panel development showed that revenue had dropped several billion euros over the span of two years driven by cheaper panels imported from China. This is in conjunction with Europe’s anti-dumping tariffs imposed on Chinese imports – tariffs that are used when a foreign developer sells goods at far below cost in order to preserve domestic jobs. For many German developers, this means less work and less development for both manufacturers and installers.
In order for an installation company to make a profit, the lower cost products are usually the ones that are provided. While there is differentiating costs between low and high performing panels, the best cost for the product is key to the future success of the company. This provides a bit of flexibility when it comes to making the installation affordable to the customer while providing net income for the installer.
Although placing tariffs on Chinese imported panels is initially utilized to protect domestic jobs from other manufacturers, how does this affect third-party installation companies that rely on cheaper products to make the development profitable? One of the biggest arguments against using solar power is the sheer cost of implementation. If government officials are concerned about renewable energies as they claim, wouldn’t they welcome the decrease in price from manufacturers? Is there a way that other country governments could offer greater subsidies to domestic manufacturers in the same manner as China?
Declination of Exports
In the third quarter of 2013, exports of Chinese solar panels had dropped slightly. While the panels still account for nearly 70-percent of the global market, the production boom seemed to have waned slightly. As various other energy alternatives have been developed such as wind, fracking for oil and additional mining for natural gas, speculations are plentiful for why the market has slowed for China.
Although the anti-dumping tariffs are there to save domestic jobs from those who can offer a product for a fraction of the cost, they can also stunt innovation. One of the driving forces in order to overcome competition is to provide a better product at a lower price. For an example of this, look at the competition between Apple and Samsung. Each are dedicated to surpassing the other.
Without foreign competition in solar panels, will domestic manufacturers be motivated enough to innovate more efficient and cheap models themselves? Are these tariffs implemented by the United States and the European Union justified as the common goal should be to provide energy for all without fossil fuels?
Paul Taylor started www.babysittingjobs.com which offers an aggregated look at those sites to help families find sitters and to help sitters find families easier than ever. He loves writing, with the help of his wife. He has contributed quality articles for different blogs & websites.
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